01.10.18

Seychelles increases Import Duties on certain building materials

Posted in Business and Economy, Seychelles legislation at 9:24 pm by Robert Klien

Effective January 1, 2018, import duty was removed in the Seychelles on dietary supplements, corrugated iron sheets, and various other building materials, including panels, tiles, and other similar materials.

According to the tax agency, VAT will still apply on the aforementioned items, at a 15% rate.

The changes were included in Statutory Instrument 68 of 2017, Customs Management (Tariff and Classification of Goods) (Amendment) No 2 Regulations, 2017.

01.02.18

Tax Law changes approved in Seychelles

Posted in Business and Economy, Seychelles government, Seychelles legislation, Seychelles offshore jurisdiction at 8:33 pm by Robert Klien

At an extraordinary meeting of the Seychelles Cabinet in December, a number of legal and tax policy proposals were approved, continuing the jurisdiction’s progress in reforming its tax regime and bolstering its economy.

According to a Ministry of Finance statement that was released following the meeting: “Cabinet approved policies relating to the Progressive Income Tax Law. The aim of these policies are to simplify income tax collection. Cabinet also approved the amendment to the Excise Tax Bill. The amendments would harmonize the categories of business and persons entitled to fuel concessions under the Excise Tax Act 2009.”

Also, administrative changes were approved to the Seychelles Revenue Commission Act and the Customs Management Bill with a view to allow for the renaming of certain posts, as well as to allow for the creation of a Revenue Commission Board.

On December 13, 2017, the Executive Board of the International Monetary Fund (IMF) approved a new Policy Coordination Instrument (PCI) for Seychelles. The 3-year arrangement with the IMF will allow the Government of the Seychelles to receive intensive support with regard to developing and implementing pro-growth economic policies.

The previous review of the economy held by the IMF in October 2017 said that while the Seychelles has made remarkable progress on enhancing its finance and economy, it still faces vulnerabilities and pressures, as a small island economy in a challenging global economic environment.

11.26.17

Tax settings overhauled in recent Seychelles’ 2018 Budget

Posted in Business and Economy, Seychelles legislation, Seychelles offshore jurisdiction, Tourism industry at 8:39 pm by Robert Klien

The Seychelles Budget included numerous proposals to change the jurisdiction’s tax settings, including new corporate tax reliefs and the settings for a progressive personal income tax regime.

According to the Government of Seychelles, its proposals for a progressive income tax will mark the 3rd phase of reform efforts that began in April 2016, with the introduction of a higher personal income tax exemption, for those earning less than SCR8,555 (USD618) a month.

Under the new changes, the threshold will remain the same, but income up to SCR10,000 will be subject to a 15% rate; income up to SCR83,333 will be subject to a 20% rate, and a 30% rate will be levied on income above that threshold. Foreign individuals will not benefit from the tax exempt threshold which will be applicable on a monthly basis, in a move said to be to reduce the tax compliance burden.

Also, an alternative for small businesses from being taxed under the business tax regime was proposed. They can be subject instead to a flat fee of SCR3,000, for businesses with a turnover of not more than SCR500,000; or a flat percentage of 3% for those businesses with turnover between SCR500,000 and SCR25m. Those with a turnover greater than this will not be eligible. In addition, it was noted that Seychelles has offered a presumptive tax with a 1.5% rate since 2013.

In the Budget, it is proposed that the following businesses will no longer have 5% tax deducted at source (DAS): building contractors, maintenance contractors, mechanics, hirers or operators of plant and equipment, or hirers of buses.

Amendments are proposed to the Business Tax Act to clarify, first, that Seychelles will have a territorial tax regime and, second, tax on depreciable assets will be limited to the original cost of the asset.

From 2019, the following tax concessions for the tourism sector will be repealed:

  • accelerated depreciation and the 200% allowable deduction for marketing and promotion costs. Instead the Government is considering offering a 200% allowable deduction for employing a qualified Seychellois graduate holding a Certificate, Diploma, or Degree or higher from an institution endorsed by Seychelles Qualification Authority (SQA); a 150% deduction for emoluments paid by an employer to a Post-Secondary or Tertiary, who is in full-time education and in part-time employment, and 150% for a business paying for training endorsed by the Agency of National Human Resources Development (ANHRD).
  • for the maritime industry, “artisanal and semi-industrial fishermen” will no longer be included in the scope of the business tax regime; instead they will play a fee in addition to current license and registration fees.

The Government has proposed to amend the tax rules for landlords of residential buildings to replace the current 15% tax with a 3% tax on gross rental receipts.

These business tax reform proposals are proposed to be effective from January 2019.

In addition, the Government is to reintroduce legislation to establish an immovable property tax, having earlier shelved plans to introduce this tax from July 2017. Under the levy, a rate of 0.25% will be charged on the capital-improved value of property owned by all foreigners as from January 2018. The tax will be applicable for all foreign-owned residential, company-owned, and leased properties of more than 25 years. Owners must make a declaration between January and June 2018, with collections expected to start from October 2018.

In accordance with the Budget, changes to the International Trade Zone Act, 1995, will be considered for inclusion in the 2019 Budget. The rate of tax on plug-in hybrid vehicles will be lowered from 15 to 10%. The Budget also exempts from VAT funeral services and reduces customs duty on dietary supplements from 25 to 0%.

Finally, it was announced in the Budget that the Seychelles Revenue Commission’s (SRC’s) organization structure will be re-organized in 2018.

05.15.17

Seychelles alters Tax Exemption for 13th month salary

Posted in Business and Economy, Seychelles government, Seychelles legislation, Seychelles offshore jurisdiction at 7:16 pm by Robert Klien

The Seychelles Government has recently published legislation in the Official Gazette to amend the jurisdiction’s individual tax regime.

Published in the Official Gazette on April 13, 2017, the Income and Non-Monetary Benefits Tax Act (Exemption) Order, 2017, sets the value of 13th month pay that an employee can receive tax-free at SCR10,000 (USD733).

Payments in excess of this amount will be subject to tax at 15%.

01.20.17

Seychelles provides Guide on Corporate Social Responsibility Tax

Posted in Business and Economy, Seychelles legislation at 10:23 am by Robert Klien

The Seychelles Revenue Commission (SRC) has issued a draft public ruling aimed at providing guidance on the definition of “turnover” for the calculation of liability to the Corporate Social Responsibility Tax (CSRT).

The 0.5% CSRT is imposed on businesses with an annual turnover equal to or exceeding the liability threshold of SCR 1 million(USD 75,100). Funds raised through the tax mostly fund community projects.

The CSRT turnover in the legislation is defined as “the gross receipts from carrying on of business.”

12.15.16

Seychelles to introduce significant Tax Changes in 2017

Posted in Business and Economy, Seychelles legislation at 10:43 am by Robert Klien

According to the newly released Budget, Seychelles will finalize significant reforms to its main taxes in 2017.

The jurisdiction will complete the introduction of a progressive personal income tax regime from July 1, 2017, rather than January 1, 2017. A SCR 8,555.5 (USD 660) tax-exempt threshold will be introduced, but it will not be available to expatriates. Income tax above that threshold will be subject to progressive rates of 15%, 20%, or 30%.

From July 1, 2017, a new property tax will be introduced on land ownership in Seychelles, to be levied only on foreigners, and purchases of private land by foreigners will also attract a high stamp duty. Further details of the new tax are still under consideration.

Also, it is proposed to change the Business Tax Act. The tax-free threshold for individual businesses, such as sole traders or partners, will remain at SCR 150,000. However to align personal income tax (PIT) and individual business tax rates, the tax rate on profits of between SCR150,000 to SCR1m will be increased from 15 to 20%. Profits above SCR 1 million will continue to be taxed at 33%.

The Government is also proposing that the presumptive tax rate will be realigned. The tax rate on businesses with a turnover of up to SCR 0.5 million is to remain at 1.5%, but a 3% tax will be imposed on businesses with a turnover from SCR 0.5 million. The new cap for the presumptive tax is proposed to rise to SCR 2 million, up from SCR 1 million. Professional taxpayers, such as accountants and engineers, will pay a 5% rate.

Larose also announced that, as from July 1, 2017, the Seychelles Civil Aviation Authority will impose an additional USD 10 passenger service fee. He noted that “the collection will be a direct contribution towards the country’s foreign exchange earnings to maintain the high standard of the Airport.”

12.13.16

Seychelles to introduce Significant Tax Changes in 2017

Posted in Business and Economy, Seychelles government, Seychelles legislation at 9:24 pm by Robert Klien

According to the jurisdiction’s newly released Budget, Seychelles will finalize significant reforms to its main taxes in 2017.

Seychelles will complete the introduction of a progressive personal income tax regime from July 1, 2017, rather than January 1, 2017. A SCR 8,555.5 (which is USD 660) tax-exempt threshold will be introduced, but it will not be available to expatriates. Income tax above that threshold will be subject to progressive rates of either 15%, 20%, or 30%.

From July 1, 2017, a new property tax will be introduced on land ownership in Seychelles, to be levied only on foreigners, and purchases of private land by foreigners will also attract a high stamp duty.

The Government of Seychelles is also planning to change the Business Tax Act. The tax-free threshold for individual businesses, such as sole traders or partners, will remain at SCR 150,000. However to align personal income tax (PIT) and individual business tax rates, the tax rate on profits of between SCR 150,000 to SCR1m will be increased from 15% to 20%. Profits above SCR1m will continue to be taxed at 33%.

In addition, it is proposed that the presumptive tax rate will be realigned. The tax rate on businesses with a turnover of up to SCR 0.5 million is to remain at 1.5%, but a 3% tax will be imposed on businesses with a turnover from SCR 0.5 million. The new cap for the presumptive tax is proposed to rise to SCR 2 million, up from SCR 1 million. Professional taxpayers, such as accountants and engineers, will pay a 5% rate.

Included in a substantial series of measures to help small and medium-sized enterprises (SMEs), the Government will exempt businesses with an annual gross revenue of up to SCR 1 m from paying tax in their first year of operation. Larose said that the medium- to long-term target is “to turn Seychelles into the SME capital of the Indian Ocean.”

Also, an additional cost for foreign visitors disembarking at the Seychelles International Airport was announced. As from July 1, 2017, the Seychelles Civil Aviation Authority will impose an additional USD 10 passenger service fee.

12.10.16

New tax measures announced in budget address

Posted in Business and Economy, Seychelles government, Seychelles legislation at 2:45 pm by Robert Klien

The Seychelles Minister for Finance, Trade and Economic Planning Peter Larose, delivering his budget address before the National Assembly on December 9.

A new tax on property owned by non-Seychellois citizens will be introduced in July 2017, said the Seychelles’ Minister of Finance in his presentation of the budget allocation 2017 to the members of the National Assembly.

Peter Larose is proposing a budget allocation amounting to around $584 million.

The new tax “will include foreigners with a Seychellois passport. Stamp Duty will be charged per square metre,” Larose said.

Also, he announced other new tax measures in his budget address including excise tax on fuel, excise tax on alcohol and tobacco products and progressive tax.

Larose said that for the excise tax on fuel, “An additional 50 cents per litre will be placed on fuel-based products. The Public Utilities Corporation (PUC), the Seychelles Public Transport Corporation (SPC) and Air Seychelles will not pay the additional cost.”

As regards excise tax on alcohol, an increase of 10% will be applicable on all drinks with an alcohol content of less than 16% in 2017. This will apply for both locally produced and imported alcoholic beverages.

In line with this revision, a 10% increase will also be placed on importation and production of tobacco products in 2017.

As for the Progressive Tax, the third and final stage will be implemented as of July 1, 2017, instead of January as was announced previously. This will be the Progressive Tax applicable on emoluments more than $648. A 15% rate will be applicable on earnings between $648 and $758 while a 20% tax will be applicable on earnings between $758 and $6,320. Workers with salaries above $6,320 will have to pay 30% on earnings above that threshold.

Larose also announced an additional cost for the services used by foreign visitors disembarking at the Seychelles International airport – as of July 2017, the Seychelles Civil Aviation Authority (SCAA) will put an additional $10 for services related to incoming foreign passengers.

04.05.16

Seychelles to limit Presidential Term

Posted in Seychelles government, Seychelles legislation at 2:20 pm by Robert Klien

On April 5, Seychelles parliament voted to amend the constitution and limit presidents to two 5-year terms in office, in contrast to wider Africa where many presidents have sought to extend term limits.
The jurisdiction’s nation elected James Michel as president in December 2015, giving him a 3rd term in office, but among the promises he made during his campaign was to ensure the change in the law.

The amendment required 2/3 thirds of the 32 lawmakers to vote in favour but all sitting members are from the ruling party except opposition leader David Pierre, who also supported the change. Pierre said that this amendment will give a chance to younger politicians to wait 10 years instead of 15, in order to contribute to the development of the Seychelles.

The new amendment will come into force at the next elections, when the incumbent president and vice president will not qualify to run for these positions.

03.01.16

Personal Income Tax Reform announced in Seychelles

Posted in Business and Economy, International Organisations, Seychelles government, Seychelles legislation at 2:10 pm by Robert Klien

The President of the Seychelles, James Alix Michel, has confirmed the changes that will be applied to the personal income tax system. These are designed to make taxation fairer and more equitable.

In his recent State of the Nation address, the President foreshadowed reforms aimed at reducing the tax burden on low-income earners and making the personal income tax system more progressive.

Under the changes, from July 2016, individuals earning up to SCR8,555.50 (USD 553.74) per month will not pay any income tax. Then, from January 2017, the first SCR8,555.50 in earnings will be subject to tax at 0%.

Also, Michel announced that the Ministry of Finance will undertake a review of the tax system in order to determine how the Government can “maximize its revenue” and reduce tax evasion in certain economic sectors.

The measures form part of the Government’s medium-term fiscal framework agreed with the International Monetary Fund (IMF), which is designed to stabilize the Government’s finances and reduce public debt. The medium-term fiscal strategy was first put in place in 2008 following a default in debt payments. The plan includes an IMF-agreed target to cut its debt-to-gross domestic product to below 50% by 2018.

According to the IMF, following the completion of its 3rd review of the Seychelles’ Extended Fund Facility (EFF), good progress is being made by the Government towards reducing the public debt burden, with the 2015 budget surplus expected to be around four percent of GDP.

Approximately USD 9.1 million has been received by the Seychelles in monetary assistance from the International Monetary Fund under the EFF arrangement approved in July 2014.

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